Sibanye in 60% discounted rights offer

Johannesburg - Sibanye Gold slumped 4.14 percent on the JSE on Thursday to close at R27.30 after the miner announced a 60 percent discounted rights offer through which it plans to raise $1 billion (R13.12bn) in order to fund its takeover of US-based platinum and palladium producer, Stillwater Mining.

Sibanye, which was established in 2013 after Gold Fields divested from its ageing South African gold assets, said that the rights offer was fully underwritten and expected to open on Monday, May 29, and close at noon on Friday, June 9.

It said shareholders would participate in the rights offer for R11.28 a share at a 60 percent discount on Wednesday’s share price. Sibanye said it planned to publish the results of the rights issue on Monday, June 12, on SENS and in local media on Tuesday, June 13.

It also said shareholders had expressed intent of underwriting the deal.

“Gold One, which holds approximately 19.9 percent of Sibanye shares, has expressed in writing to Sibanye its intention to exercise the share rights allocated to it under the terms of the rights offer,” Sibanye said.

The miner also said that it had entered into an underwriting agreement with Citigroup Global Markets, HSBC Bank, JP Morgan Securities and Morgan Stanley.

Meryl Pick, Gold Fund manager at Old Mutual Equities boutique, said the discount was bigger than expected.

“This signals that management is trying hard to ensure that the majority of shareholders take up their rights,” she said.

“Given the discount, I would expect most shareholders to follow their rights.

"At this point, shareholders who are unhappy with the deal would have reduced their position or sold out entirely,” Pick said.

Sibanye announced in December last year that it planned to raise a minimum of $750 million, charging that the transaction would enhance its asset base by adding two low-cost, low-risk, steady state producing platinum group metals mines to its portfolio as well as improve its cash flow.

But last month the company changed its tune and said it would raise the amount owing to the stronger rand and spot precious metals prices.

It said the capital would be raised taking into consideration its response to feedback from certain shareholders regarding the impact of these on the ability of the company to achieve a more desirable financial leverage ratio.

Stillwater is Sibanye’s first foreign asset after it ventured into the platinum industry following its acquisition of Aquarius Platinum and Anglo American Platinum's Rustenburg operation.

Sibanye has previously said the Stillwater deal would give it access to a portfolio of low-cost assets with growth potential.

Stillwater’s platinum group metals reserves comprise approximately 78 percent palladium, the company said in December.